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In business, customer loyalty models have been extensively studied and expanded upon by various professionals. From the Apostle Model to cause-related marketing strategies, the types of customer loyalty models employed by businesses partially hinges on the type of business offering and the company’s ability to understand the relative value of customer loyalty. All customer loyalty models center around one thing — the customer.
It is widely agreed that there are two types of customer loyalty – behavioral loyalty and attitudinal loyalty. As the two terms imply, these types of customer loyalty are affected by behavior and attitude. Behavioral loyalty encompasses habitual purchases while attitudinal loyalty reflects a consumer’s attitude towards a specific brand. The factors that may or may not sway consumer loyalty can be developed with a business’s understanding of effective customer loyalty models.
Customer loyalty models go hand-in-hand with marketing. Everything from brand recognition to customer service influences customer loyalty. For example, in a service-related business, customer service plays a large role in customer satisfaction, which directly relates to customer loyalty. In the Apostle Model of customer loyalty, four categories of consumers are distinguished: loyalists, defectors, mercenaries, and hostages.
Loyalists are those customers who are both satisfied with a product or service and likely to continue using it. Defectors are defined as customers who are unsatisfied and unlikely to continue using a product or service. Mercenaries are customers who are satisfied, but whose satisfaction does not guarantee future use. Lastly, hostages are defined as unsatisfied customers that will continue to use a product or service simply because there is no viable alternative.
While adapting customer loyalty models to a specific business is part of the initial work, managing the loyalty model is ongoing. Traditionally, there has been a great emphasis on customer satisfaction. The business that employs a model that trains and encourages a customer service workforce to always satisfy its customers is presumably successful. There are many variables in business models, however, and customer loyalty is no exception.
More recently, a focus on customer rewards and value has become a valuable part of some customer loyalty models. Examples include reward points earned for purchases, discounts, and custom coupons. Again, the type and success of any given model adapted is contingent upon factors such as management, business offering and customer base. For instance, a business dealing in unsought offerings, or offerings that are viewed as necessary but not sought-after, such as funeral services or mold remediation, are not likely to find success by offering customer rewards. They would likely be more successful by offering superior customer satisfaction, which leads to referrals.
Regardless of the type of customer loyalty model a company adapts, the basis of a successful model is in the ability to understand and identify its customers. Marketing strategies as well as management of workforce go a long way in customer loyalty and retention.
I think this article forgets another important model, which captures the NPS and apostle in one index: VOCI analysis.
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